5 Ways Surgery Centers Can Maximize the Benefits of Their Membership With a GPO

Randall Piper, senior director of non-acute contracting for group purchasing organization Amerinet, discusses five ways ambulatory surgery centers can maximize the benefits of their membership with a group purchasing organization.

1. Standardize. Mr. Piper says standardization is easily the best way ASCs can maximize their membership. "There are many benefits to standardization," he says. "You can minimize suppliers, lower par levels, lower the amount of SKUs in a facility, increase consolidation and increase contract compliance, which generally results in access to better pricing tiers. Most contracts are written so that the more volume you can drive to a specific vendor, or a specific contract, the better the pricing becomes."

Standardization, however, is often a challenge for any facility, but the more an ASC can do to standardize, the more it will benefit.

"What you really want to do is standardize to one particular manufacturer where you can, particularly with commodity and basic surgical items," Mr. Piper says. "You're always going to have physician-preference products, but 90 percent of the time one manufacturer will do the job in a given category."

There are other benefits to standardization other than just cost savings. Standardization helps to ensure specific products can be located easily in facilities with multiple storage locations. "[Without standardization], if you are looking for something in a hurry, you might have to look in a couple of places to find it and that's not optimal," he says.

If you can consolidate vendors, this can also improve efficiency for working with distributors. "Generally they'll be able to keep more product in stock and you'll have a bigger safety net," Mr. Piper says. (Note: See #4 for more information on improved relationships with distributors)

Finally, standardization can assist with revenue optimization and an ASC's ability to capture CPT codes so it can receive proper reimbursement for items such as mesh and other high-dollar medical-surgical products. "Through the consistency of using your formulary and GPO contracts … it cuts down on confusion," Mr. Piper says. "If you're using lots of similar products made by many different manufacturers, the ASC will have different names and codes for them in the facility, and probably different descriptions as well. You can lose out on the back-end if you don't have the consistency and clarity on the front-end."

2. Value adds. ASCs will be wise to take advantage of the many "value adds" — additional benefits on top of the price savings — often associated with contracts, Mr. Piper says. He says one terrific example of a contract value-add is seen in Amerinet's contract with Aesculap for surgical instruments.

"Within that contract, in addition to the different tiers of pricing and different classes of trade, there's a part of that agreement which addresses instrument repair and maintenance," he says. "Aesculap has a very robust program which can help ASCs to spread the cost of their instrument repair, sharpening and maintenance, for example, with a flat monthly fee over a period of time. They also offer [deals on] shipping, replacement items and loaners."

One way this is valuable for an ASC is in the cost reduction seen for repairs and maintenance, he says. It is also valuable as an ASC may not need to invest in multiple sets of the same equipment if the facility knows it can obtain a loaner item as a temporary solution in the event of a piece of equipment being out of service.

"You may pay a nominal fee to be part of a loaner/repair program with a supplier but in terms of cash outlay for additional equipment, the savings can be pretty significant," Mr. Piper says.

3. Quality programs. Mr. Piper says GPOs will often offer quality programs to help facilities in a number of areas including accreditation surveys, infection prevention programs, clinical benchmarking guidelines and regulatory issues.

"Many of the bigger GPOs, Amerinet included, have hired clinicians, former ASC managers or RNs who have a strong regulatory background, and who understand what's important that's happening in the industry," he says. "They send out bulletins over e-mail or make the information available on the GPO's member resource website. "[These knowledgeable sources] will sift through the fluff and get to the more important, more urgent issues of interest to members."

4. ASC-specific distribution contracts. ASCs typically understand the value of a GPO's manufacturer contracts, but surgery centers should also look for distributor agreements which include terms specific to the needs of surgery centers, Mr. Piper says. Many ASCs work on a just-in-time scenario for products, meaning most facilities may only keep a day or two stock of products in-house. It makes sense for ASCs to find distributors with contract terms speaking specifically to this situation and the challenges it can present.

"If you're working with a distributor with a contract specific to what's important to ASCs, they can save on things like emergency deliveries," he says. "These distributors likely have inventory management programs which can help ASCs make sure they're not stocking too many products, such as suture, wound closure and endo-mechanical type products. These can be a really high-dollar form of inventory. The distributor's job is to make sure they have enough safety stock in the warehouse and are not unnecessarily overloading the facility with expensive products."

5. Different classes of trade, tier thresholds. Some GPOs including Amerinet negotiate contracts specific to certain classes of trade other than those for acute-care hospitals. Amerinet has contracts and tiers specific to non-acute settings, which include ASCs. "The reason we do that is because there are different reimbursement guidelines within ASCs which require different types of products (low-cost, high-value) than you might normally find in a typical acute-care centric offering," Mr. Piper says.

Even more important, he says, are the opportunities associated with different tier thresholds equating to more typical ASC spending versus the much higher spending you would see in an acute-care facility.

"Negotiating a contract that can actually be utilized in terms of percentage commitment or dollar commitment within a certain category specific to ASCs can be extremely valuable," he says. "You might have smaller tier increments, and in a well-negotiated ASC agreement that can translate to big savings. In an acute-care facility, you might have to spend tens of thousands of dollars to get to the next tier. If you can make those tiers smaller in an ASC space, surgery centers can drive behavior which will net them more efficiencies and greater compliance with the contract and save them significant dollars."

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